Sunburst Exits the Apartment Market with $85M Sale of Suburban D.C. Property
- Mar 11, 2010
March 11, 2010
By Barbra Murray, Contributing Editor
With the disposition of Vista on Courthouse, a 220-unit apartment building in Arlington, Va., Sunburst Hospitality has bid adieu to the apartment market. The $85 million that the Silver Spring, Md.-based hotel owner and manager pocketed with the sale of the property to Equity Residential will allow the company to invest more cash in hotel purchases.
Vista boasts a location just outside of Washington, D.C., near the Pentagon. Development of the luxury multifamily property was part of a Sunburst expansion program, kicked off in 2005, that led the company into real estate sectors beyond the hospitality market. Vista sprang up in 2007 on the site of Sunburst’s former Quality Inn hotel at Courthouse Metro with 220 rental units and 32 townhomes; Sunburst will continue marketing the 15 townhomes that remain unsold.
Sunburst developed Vista with the goal of selling the project once all apartments had been leased, so its decision to unload the 11-story tower was always part of the original game plan. Funds from the sale will be used to enhance its exiting 30-property portfolio with limited and full service hotels in the mid-scale and upscale range across the country.
“Sunburst sees an opportunity on the horizon to acquire quality hotel assets at attractive yields,” Kevin Haley, Sunburst President and CEO, commented in a prepared statement. “Similar to the early 1990’s, many hotels will trade below replacement cost.”
The company plans to, as it has in the past, rely on its renovation, re-branding and operations skills to add value to assets.
Industry experts concur that now is a good time to mine the hotel market for prime opportunities. According to real estate services firm Jones Lang LaSalle Hotels’ Hotel Investment Outlook report, substantial discount to replacement costs and peak values will spur more able investors to jump into the market this year. Additional conditions make the timing just right.
“Investors recognize that the recovery will be robust due to the operating costs that have been taken out of the business, much of which is sustainable, and the fact that the liquidity crunch will choke-off new supply for the foreseeable future,” the report notes.